The 43rd GST Council Meeting was held on 28th May, 2021 wherein various decisions were made. Amongst said decisions, one of the decision was to make appropriate changes in the relevant notification for an explicit provision to make appropriate changes in the relevant notification for an explicit provision to make it clear that land owner promoters could utilize credit of GST charged to them by developer promoters in respect of such apartments that are subsequently sold by the land promotor and on which GST is paid. The developer promotor shall be allowed to pay GST relating to such apartments any time before or at the time of issuance of completion certificate.
In light of the above GST Council decision, Notification No. 03/2021- Central Tax (Rate) dated 2nd June 2021 has been issued whereby Notification No. 6/2019- Central Tax (Rate) dated 29th March 2019 has been amended.
It may be noted that vide Notification No. 6/2019- Central Tax (Rate) dated 29th March 2019 special time of supply for payment of tax was notified for the following classes of registered persons, namely:-
(i) a promoter who receives development rights or Floor Space Index (FSI) (including
additional FSI) on or after 1 st April, 2019 for construction of a project against consideration payable or paid by him, wholly or partly, in the form of construction service of commercial or residential apartments in the project or in any other form including in cash;
(ii) a promoter, who receives long term lease of land on or after 1 st April, 2019 for construction of residential apartments in a project against consideration payable or paid by him, in the form of upfront amount (called as premium, salami, cost, price, development charges or by any other name), as the registered persons.
The Notification No. 03/2021- Central Tax (Rate) dated 2nd June 2021 has made the following amendments to Notification No. 6/2019- Central Tax (Rate) dated 29th March 2019:
(a) for the words “in whose case the liability to”, the words “, who shall” shall be substituted;
(b) for the words “shall arise on the date of issuance of completion certificate for the project, where
required, by the competent authority or on its first occupation, whichever is earlier”, the words “in a
tax period not later than the tax period in which the date of issuance of the completion certificate for the project, where required, by the competent authority, or the date of its first occupation, whichever is earlier, falls” shall be substituted.
Relevant portion of the Notification No. 6/2019- Central Tax (Rate) dated 29th March 2019 as amended now reads as under:
“…following classes of registered persons, namely:-
(i) a promoter who receives development rights or Floor Space Index (FSI) (including additional FSI) on or after 1st April, 2019 for construction of a project against consideration payable or paid by him, wholly or partly, in the form of construction service of commercial or residential apartments in the project or in any other form including in cash;
(ii) a promoter, who receives long term lease of land on or after 1st April, 2019 for construction of residential apartments in a project against consideration payable or paid by him, in the form of upfront amount (called as premium, salami, cost, price, development charges or by any other name),
as the registered persons who shall pay central tax on, –
(a) the consideration paid by him in the form of construction service of commercial or residential apartments in the project, for supply of development rights or FSI (including additional FSI);
(b) the monetary consideration paid by him, for supply of development rights or FSI (including additional FSI) relatable to construction of residential apartments in project;
(c) the upfront amount (called as premium, salami, cost, price, development charges or by any other name) paid by him for long term lease of land relatable to construction of residential apartments in the project; and
(d) the supply of construction service by him against consideration in the form of development rights or FSI (including additional FSI), –
in a tax period not later than the tax period in which the date of issuance of the completion certificate for the project, where required, by the competent authority, or the date of its first occupation, whichever is earlier, falls”
It has been stated in the amendment Notification that the amendments shall come into force with effect from 2nd June, 2021.
It may be noted that similar Notifications have also been issued under IGST Act and UTGST Act.
For reading / downloading the Amendment Notification click at: https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-03-2021-2020-cgst-rate.pdf
Follow us for free tax updates : facebook Twitter
***
Subscribe our portal and get FREE Tax e-books , quality articles and updates on your e-mail.
Resolve your GST queries from national level experts on GST free of cost.
CA. Mohammad Salim is an ICAI award winning Chartered Accountant having rich experience of more than 20 years in the field of indirect taxes. He is the Member, Indirect Taxes Committee of PHD Chamber of Commerce and Industry. He is author of four successful books on GST published by Taxmann Publication and is also GST expert on taxmann portal.
